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Kevin Rudd milked all the PR he could out of his announcement in Japan this week of a federal government subsidy of $35 million to Toyota to produce hybrid petrol-electric vehicles at the car maker's Melbourne plant.

Details of the deal with Toyota are still fuzzy, but it is more than likely that both federal and Victorian governments have agreed to take a substantial proportion of the hybrid car's output for their government fleets, thus providing additional underwriting for Toyota's investment while increasing the taxpayer subsidy.

Hybrid cars are more fuel-efficient than ordinary petrol vehicles and they make their owners feel that they are not only doing something about global warming and stemming the tide of oil imports, but that they are seen to be doing so.

In reality, hybrids are an interim technology at best, and they're also expensive — the celebrated Prius at $39,000 is about $17,000 more than an ordinary Corolla sedan, which uses only marginally more petrol. The Prius owner will have to save 11,333 litres of fuel (at $1.50 a litre) over a distance of about 400,000 kilometres before the additional expense is repaid. This assumes a saving by the Prius of about three litres per one hundred kilometres over the Corolla; although the higher the petrol price goes, the better the mathematics begin to look.

Rudd and Labor are under some pressure from the car unions to introduce new manufacturing lines at a time when the Australian industry is under intense pressure from cheap imports, thanks to the high Australian dollar.

After doing his deal with Toyota in Japan, Rudd dispatched his industry minister Kim Carr to Detroit to lecture the US car makers, General Motors and Ford, on the need to also make fuel-efficient cars in Australia. The Industry Minister is wasting his time and taxpayers' money.

Rudd hasn't done his homework. He appears to be unaware, or is cynically ignoring the fact, that General Motors announced a month ago that it would make hybrid Commodores at its South Australian plant. The Commodores are expected to be on the road several months before the Toyotas. The executive who made the announcement, Nick Reilly, General Motors' president of Asia Pacific, said Holden would also start making smaller four-cylinder cars alongside the Commodores at Elizabeth, near Adelaide.

Ford has already started making small cars at Broadmeadows. Rudd must think the Americans are stupid.

They are already well ahead of him. Despite their addiction to making gas guzzlers in the US, the Americans have been making fuel-efficient cars in Europe and elsewhere for longer than Rudd has been in politics. Both Ford and GM are fighting for their survival and are likely to produce some truly adventurous fuel saving and alternative energy vehicles in coming years.

The twist is that Nick Reilly in making his announcement of the hybrid Commodore said a subsidy would be nice — to get the car on to the market at a competitive price and give an incentive to buyers — but declared it would be made "with or without" taxpayer funding.

Furthermore, General Motors teamed with the CSIRO to produce a four-cylinder hybrid Commodore in early 2000, a year before Toyota imported its first Prius into Australia. For reasons never explained, the Commodore hybrid was shelved about three years later. The next hybrid will probably be powered by a V6 partnered by an electric engine, but clearly the game is well underway without any assistance or advice from the politicians.

Toyota no doubt is delighted Rudd has rushed in and thrown money at them, but he appears oblivious to the fact that a rival maker is even further down the track of making a hybrid in Australia — with or without subsidies, and clearly with an export market in mind.

The government has also blundered on with this policy against the advice of its main adviser on industry matters, the Productivity Commission.

The Commission argued that hybrid cars would be cheaper if made overseas from long production runs. The Australian-made Toyota Camry hybrid will have a run of just 10,000 a year; barely economic even with a subsidy. It is little more than a stunt really, exploiting peoples' desire to be seen to be doing something about global warming by using less fuel — even if it's a miniscule saving over a raft of fuel efficient four-cylinder cars.

In a way, the hybrid Commodore is more significant than the Camry hybrid Toyota plans to produce because it will be a traditional "big six" Australian family car with the fuel economy of a four. It has the potential to stem the decline of the "big six".

Rudd's hybrid car announcement is another of his symbolic gestures, and a naive diversion in the face of the steeply rising oil price that threatens to inflict recession on economies globally.

The Opposition in the Senate should block this absurd Ruddite attempt to pick winners, for which they have no election mandate. That article makes a good point about a proposed Commodore hybrid, and I pointed out the Honda Civic Hybrid. Why should taxpayers be forced to subsidize just the Toyota one, distorting the hybrid market?

“The destructive capacity of the individual, however vicious, is small; of the state, however well-intentioned, almost limitless. Expand the state and that destructive capacity necessarily expands, too, pari passu.”—Paul Johnson, Modern Times, 1983.

They tried that in the 1970s and it was a disaster. Yet the same economically illiterate ideas are still popular with demagogues. Foolwatch is one result, which prevents price fluctations for 24 hours.

Last edited by Capablanca-Fan; 13-06-2008 at 04:29 PM.

“The destructive capacity of the individual, however vicious, is small; of the state, however well-intentioned, almost limitless. Expand the state and that destructive capacity necessarily expands, too, pari passu.”—Paul Johnson, Modern Times, 1983.

Those futile attempts to control fuel price have no influence on the oil price. As I understand, the discussion is about the latter.

When one country sitting on terabarrells of oil makes it streng verboten to drill for it, it's hardly surprising that the price is high. In both cases, government interference is a disaster.

“The destructive capacity of the individual, however vicious, is small; of the state, however well-intentioned, almost limitless. Expand the state and that destructive capacity necessarily expands, too, pari passu.”—Paul Johnson, Modern Times, 1983.

When one country sitting on terabarrells of oil makes it streng verboten to drill for it, it's hardly surprising that the price is high. In both cases, government interference is a disaster.

Would drilling Alaska have a drastic effect on the oil price?
I have a sneaking suspicion that environmental impact is just a red herring, would not be surprised if it was a play by some special interest groups. However, I do not believe in conspiracy theories, so sheer stupidity of US establishment is quite a viable alternative.

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“The destructive capacity of the individual, however vicious, is small; of the state, however well-intentioned, almost limitless. Expand the state and that destructive capacity necessarily expands, too, pari passu.”—Paul Johnson, Modern Times, 1983.

It undoubtedly would have an effect on oil price (increased supply). The question is the magnitude.

If America no longer needed Saudi's oil supply, Saudi would have to drop its price to sell that oil elsewhere. It would have the added effect of reducing funding for Islamofascist terrorists—at least those who aren't getting their clock cleaned by the surge in Iraq.

“The destructive capacity of the individual, however vicious, is small; of the state, however well-intentioned, almost limitless. Expand the state and that destructive capacity necessarily expands, too, pari passu.”—Paul Johnson, Modern Times, 1983.

It undoubtedly would have an effect on oil price (increased supply). The question is the magnitude.

Alright then. Alaska would have an insignificant effect on oil price. As stated in post #6 of this thread, the entire Alaskan reserves (under generous estimates) equates to about 18 months of US demand, or about 4 months of Global demand.

Alright then. Alaska would have an insignificant effect on oil price. As stated in post #6 of this thread, the entire Alaskan reserves (under generous estimates) equates to about 18 months of US demand, or about 4 months of Global demand.

Replacing Saudi's oil for two decades will have a big effect. Far better than the crappy plan of more taxes on oil company profits while forbidding America's own oil from being drilled, as per Pax's political hero B. Hussein Obama and his Dem party that answers largely to ecofascists. Yet home-grown oil doesn't have the huge pollution risks of imported oil, e.g. tankers springing leaks or foundering.

Last edited by Capablanca-Fan; 13-06-2008 at 02:56 PM.

“The destructive capacity of the individual, however vicious, is small; of the state, however well-intentioned, almost limitless. Expand the state and that destructive capacity necessarily expands, too, pari passu.”—Paul Johnson, Modern Times, 1983.

Jono, instead of complaining about drilling in Alaska, how you have not mentioned that OPEC restricts the amount of oil that can be sold? Surely that is the single biggest factor determining the current price of oil.

Jono, instead of complaining about drilling in Alaska, how you have not mentioned that OPEC restricts the amount of oil that can be sold? Surely that is the single biggest factor determining the current price of oil.

Garvin, it is a bit rich for American politicians whinging that OPEC doesn't export enough oil as long as they refuse to drill for their own oil. Surely a refusal to drill is far more restrictive than anything OPEC can do. If America did drill in Alaska and offshore, OPEC would have far less power to hold the world to ransom.

“The destructive capacity of the individual, however vicious, is small; of the state, however well-intentioned, almost limitless. Expand the state and that destructive capacity necessarily expands, too, pari passu.”—Paul Johnson, Modern Times, 1983.